Many businesses use computing system implemented payroll management systems offered by third-party payroll management system providers to perform various payroll related functions for the business. Herein, businesses that are customers of the payroll management system providers and/or are users of the computing system implemented payroll management systems are also referred to interchangeably as “customers” or “customer businesses”.
Typically, computing system implemented payroll management systems perform the various payroll functions for a customer business based on data provided by the customer business toward the end of each pay period. One of the payroll functions currently offered by payroll management system providers is direct deposit service. Using a typical direct deposit service, an employee of the customer business does not receive a traditional compensation check, but rather has his or her compensation automatically deposited into a bank account designated by the employee. Direct deposit service represents a significant convenience to the employee and, in many cases, to the employer/customer business as well.
As noted direct deposit service is often very convenient for both the customer business and its employees. However, direct deposit service can also present significant financial risks to the payroll management system providers. This is because in order to provide an accurate payroll, and for the convenience of the customer business, there is typically a relatively short time frame between when the customer business submits the payroll information to the payroll management system provider and when funds representing the direct deposit payroll must be transferred to the individual accounts of the employees of the customer business. In many cases this time frame is less than two banking days. As a result, in many cases, while funds representing the direct deposit payroll are theoretically transferred from the customer businesses account to the payroll management system provider, and then from the payroll management system provider's account to the individual employee accounts, these funds are often actually transferred to the individual employee accounts from the payroll management system provider before the transaction transferring the direct deposit payroll funds from the customer business to the payroll management system provider is actually verified and completed. As a result, in many cases, the payroll management system provider is essentially floating the direct deposit payroll funds to the employees on behalf of the customer business.
In the vast majority of instances, the system described above works well for all parties involved. However, if, for any reason, the customer business has insufficient funds to actually cover the direct deposit payroll, the payroll management system provider must then attempt to recover the funds from the customer business. In most instances, insufficient funding on the part of the customer business is a temporary state and the funds are readily recovered by the payroll management system provider. However, in some instances, the customer business purposely seeks to defraud the payroll management system provider.
In order to protect themselves from these few malicious individuals, most payroll management system providers currently impose direct deposit payroll limits on their customer businesses. By imposing these limits, the payroll management system providers can cap their losses in the event of a fraudulent transaction. However, many customer businesses need to occasionally exceed direct deposit payroll limits for entirely legitimate reasons such as, but not limited to, payment of periodic bonuses, the addition of new employees, or any one of numerous other “honest” reasons that a direct deposit payroll request may fluctuate and/or exceed a defined limit. Currently, if a customer business submits a direct deposit payroll request that exceeds the direct deposit payroll limit, the direct deposit payroll request is typically denied and/or the customer business is sent an error message. Typically, the customer business must then manually contact, e.g., call or otherwise contact, an agent for the payroll management system provider and request a direct deposit payroll limit increase. However, as noted above, direct deposit payroll requests are typically made very close to the time the payroll funds are actually needed in order to pay employees on the designated payday. Consequently, using current systems, a customer business is often forced to frantically try and contact the agent for the payroll management system provider at the last minute before the payroll deadline is missed. The problem is further amplified by the fact that many businesses have the same paydays, such as on the 1st and 15th of each month. Consequently, in many cases, the agents for the payroll management system provider are flooded with numerous requests for direct deposit payroll limit increases in more or less the same time frame. As a result, the agents ability to respond to the customer businesses is often further delayed by sheer volume of requests, thereby further exasperating the problem for the customer business.